SBA 7(a) Q&A
Short answer
Buying a business from a relative is permissible, but the transaction will undergo extra scrutiny to ensure it's an arm's-length transaction with fair market terms.
The SBA allows acquisitions between relatives, but lenders must ensure the sale price and terms are consistent with an arm's-length transaction. This typically requires a robust, independent business valuation to justify the purchase price.
If you're buying your uncle's successful plumbing business for $800,000, the lender will require a detailed independent appraisal to confirm that $800,000 is a fair market value, and the terms of the sale are competitive with what a non-relative buyer would receive.
Insider move
Lenders are highly cautious about related-party transactions due to the potential for inflated prices or preferential terms that could jeopardize the loan's viability. They will meticulously verify the valuation and ensure no conflicts of interest exist.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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